To the Editor:

James Pethokoukis worries that allowing a bit of inflation could easily “get out of hand,” thereby harming economic growth [“Let There Be Growth and/or Inflation,” January]. But keeping inflation low doesn’t seem to be doing any good, either, which undermines the fear of inflation to which Mr. Pethokoukis subscribes. According to the Federal Reserve Bank of Cleveland, “its latest estimate of 10-year expected inflation is 1.34 percent. In other words, the public currently expects the inflation rate to be less than 2 percent on average over the next decade.” And what is this low-inflation-as-far-as-the-eye-can-see forecast doing for growth?

Inflation is not the problem. Inflation is dead. And judging from Japan, inflation is not likely to be a problem. 

Growth is the problem—or, rather, lack thereof. The Fed should get aggressive (and not through fiscal stimulus). Really, would not five years of 5 percent real growth and 5 percent inflation do wonders for the economy? Is a slavish and peevish devotion to fighting inflation worth sacrificing prosperity?

Benjamin Cole 
Los Angeles, California

James Pethokoukis writes:

Benjamin Cole makes a point with which I agree. Growth is the real problem. And it has been for a long time. That’s why the United States needs policies that create a fertile environment for stronger long-term growth via more innovation and productivity. Stable prices are a key part of that formula. Higher inflation makes investment less rewarding and creates massive uncertainty. There’s no doubt inflation is low today. Good. Let’s check that box and get to work on reforming the tax code and creating an education system that prepares Americans for the careers of tomorrow. I have a lot more faith in that working to create sustainable growth than in the ability of Ben Bernanke or his successors to precisely dial inflation up or down on command.